Zytronic Regulatory News (ZYT)

29 May 2008 07:00



For Immediate Release

29 May 2008

ZYTRONIC PLC

("Zytronic" or the "Company")

Interim Results for the six months ended 31 March 2008

Zytronic plc, a leading specialist manufacturer of touch sensors and optical filters for electronic displays, announces its interim results for the six months ended 31 March 2008.

Highlights

Group turnover of £6.99m increased by 17% (2007 restated: £5.96m);

Group operating profit increased 50% to £736,000 (2007 restated: £490,000);

Profit before tax of £666,000 increased by 45% (2007 restated: £458,000);

Basic EPS of 3.3p increased by 27% (2007 restated: 2.6p); 

Proposed interim dividend maintained of 1.00p per share;

Mark Cambridge promoted to Chief Executive in January 2008; 

New capacity for ZYPOS® production fully operational in January 2008;

Encouraging growth in sales of recently introduced ZYPOS® touch sensors;

Leading global supplier of display systems signed as distributor for ZYPOS® into gaming industry.

On outlook, Chairman, John Kennair said:

"The introduction of ZYPOS® has played a significant part in the growth of 44% of new touchscreen business written in the first half. The successful commissioning of the new manufacturing facilities will have a significant impact on manufacturing costs over the coming years. These, combined with the return to more normal trading levels within the ATM market and the low level of reliance on the UK market with over 70% of sales exported, give us continuing confidence in future growth in sales and profitability."

Enquiries:

Zytronic plc	(Today: 020 7466 5000; thereafter 0191 414 5511)
Mark Cambridge, Chief Executive
Denis Mullan, Finance Director
Buchanan Communications Ltd	020 7466 5000
Richard Darby, Isabel Podda
Brewin Dolphin Securities Ltd
Alan Stewart, Corporate Finance	0845 213 4213

Notes to Editors

Zytronic is an industry leader in the development and manufacture of customised optical filters to enhance electronic display performance. It is also an innovator in the production of specialised and transparent laminates for niche markets.

Based on this lamination expertise, Zytronic has developed a unique range of touch sensor products employing Projected Capacitive Technology (PCTTM) which enables the pointing device to sense through an anti-vandal screen in front of the display. This system offers significant benefits to electronic display manufacturers.

Operating from three modern factories near Newcastle-upon-Tyne in England, Zytronic assembles touch sensors and filters, utilising special glass and plastic materials, in environmentally controlled clean rooms. 

Chairman's statement

Results

These interim results have been prepared to the new International Financial Reporting Standards (IFRS) and consequently the comparative numbers for 2007 have been restated. 

Sales grew by 17% over the corresponding period last year at £6.99m (2007; £5.96m). This higher level of sales led to an increase of 50% in operating profit to £736,000 (2007; £490,000) and pre-tax profits increased by 45% to £666,000 (2007; £458,000). The estimated tax rate has increased to 27% (2007; 17%) and this has impacted on the growth in earnings per share which has increased by 27% to 3.3p (2007; 2.6p).

Trading

Sales at £6.99m, of which 73% are exports, have grown by 17% over 2007. This sales growth is spread evenly between touchscreen products and other products within the group's portfolio. In my statement in December 2007, I mentioned the difficulties that had been experienced in the ATM sector with the introduction of vendor managed inventory control systems. This resulted in a reduction of sales in this sector, the primary impact being in the second half of last year. We have experienced a return to more normal levels in the ATM sector and the indications are that this will continue.

Whilst overall sales growth has been relatively modest, the new orders received in this period for touchscreen products has grown by 44% over the corresponding period last year. This growth in new orders comes from a range of blue chip customers in the information, kiosk, self service, ticketing and, more importantly, gaming sector and will have significant impact in the second half.

The new ZYPOS® manufacturing facility became fully operational in January. The new equipment for automated laminating and laser soldering has been successfully commissioned and will provide substantial cost savings as volumes increase.

The ZYPOS® product was exhibited by several of our gaming customers at the International Casino Exhibition and associated tradeshows in London in January 2008. Subsequently our operating subsidiary, Zytronic Displays Ltd., has signed as a distributor American Gaming and Electronics Inc, a subsidiary of Wells-Gardner Electronics Corporation, which is the leading global supplier of display systems into the gaming industry. I look forward to this new relationship further increasing our presence in this sector.

Dividend

The Directors have declared an interim dividend of 1.0p per share (2007; 1.0p per share) payable on 27 June 2008 to shareholders on the Register on 13 June 2008.

Management

I am pleased to advise that Mark Cambridge was appointed to the position of Chief Executive Officer on 21 January 2008. Mark joined the company in 1991 and has held various positions within the group, being appointed Managing Director of the trading subsidiary in February 2006 and to the Zytronic plc board in June 2007. I am sure Mark will be very successful in his new role.

Outlook

The introduction of ZYPOS® has played a significant part in the growth of 44% of new touchscreen business written in the first half. The successful commissioning of the new manufacturing facilities will have a significant impact on manufacturing costs over the coming years. These, combined with the return to more normal trading levels within the ATM market and the low level of reliance on the UK market with over 70% of sales exported, give the Directors continuing confidence in the growth in both sales and profitability going forward.

J M Kennair MBE

Chairman

29 May 2008

Consolidated Income Statement:

unaudited results for the six months to 31 March 2008

			Restated	Restated
		Six months to	Six months to	Year to
		31 March	31 March	30 September
		2008	2007	2007
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
Group revenue		6,993	5,960	11,437
Cost of sales		4,820	4,090	7,971
Gross profit		2,173	1,870	3,466
Distribution costs		101	108	197
Administration costs		1,348	1,288	2,556
		1,449	1,396	2,753
Group operating profit		724	474	713
Other operating income		12	16	36
Group operating profit from continuing operations		736	490	749
Finance costs		(75)	(38)	(73)
Finance revenue		5	6	7
Profit before taxation		666	458	683
Taxation	3	(182)	(77)	(149)
Profit for the period from continuing operations		484	381	534

Earnings per share
Earnings per share - basic	4	3.3p	2.6p	3.6p
Earnings per share - diluted	4	3.3p	2.6p	3.6p

Statement of total recognised income and expense: unaudited accounts 

for the six months to 31 March 2008

		Restated	Restated
	At	At	At
	31 March	31 March	30 September
	2008	2007	2007
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Income and expense recognised directly in equity
Deferred tax on share based payments	13	(11)	(52)
Net income recognised directly in equity	13	(11)	(52)
Profit for the period	484	381	534
Total recognised income and expense for the period	497	370	482

Consolidated balance sheet: 

unaudited results at 31 March 2008

		Restated	Restated
	At	At	At
	31 March	31 March	30 September
	2008	2007	2007
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment	5,334	3,918	5,208
Intangible assets	2,106	2,104	2,122
Trade and other receivables	235	-	194
	7,675	6,022	7,524
Current assets
Inventories	1,891	1,871	1,828
Trade and other receivables	2,937	2,586	2,767
Cash and short term deposits	563	403	317
	5,391	4,860	4,912
Total assets	13,066	10,882	12,436
Equity and liabilities
Current liabilities
Trade and other payables	1,339	812	1,376
Financial liabilities	843	312	621
Accruals and deferred income	503	494	399
Taxation liabilities	108	-	-
	2,793	1,618	2,396
Non-current liabilities
Interest bearing loans and borrowings	1,293	624	1,340
Deferred tax liabilities	542	432	479
	1,835	1,056	1,819
Total liabilities	4,628	2,674	4,215
Net assets	8,438	8,208	8,221
Capital and reserves
Equity share capital	147	146	147
Share premium	6,473	6,450	6,473
Revenue reserve	1,818	1,612	1,601
Equity shareholders' funds	8,438	8,208	8,221

Group cashflow statement:

unaudited results for the six months to 31 March 2008

		Restated	Restated
	Six months to	Six months to	Year to
	31 March	31 March	30 September
	2008	2007	2007
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Operating activities
Group operating profit	736	490	749
Adjustments to reconcile group operating profit to net cash inflows from operating activities
Depreciation of property, plant and equipment	268	243	490
Amortisation of intangible assets	159	128	248
Share-based payments	14	23	46
Gain on sale of property, plant and equipment	-	-	(1)
Increase in inventories	(63)	(165)	(122)
(Increase)/decrease in trade and other receivables	(224)	306	(96)
Increase/(decrease) in trade and other payables	67	(328)	34
Cash generated from operations	957	697	1,348
Taxation repayment/(paid)	13	11	(29)
Net cashflow from operating activities	970	708	1,319
Investing activities
Interest received	5	6	7
Sale of property, plant and equipment	-	-	1
Purchases of property, plant and equipment	(394)	(459)	(1,901)
Payments to acquire intangible assets	(143)	(77)	(202)
Net cashflow from investing activities	(532)	(530)	(2,095)
Financing activities
Interest paid	(75)	(38)	(73)
Dividends paid to equity shareholders of the parent	(293)	(293)	(439)
Proceeds from share issues	-	-	24
New borrowings	139	-	1,123
Repayment of borrowings	(62)	(71)	(134)
Repayment of capital element of finance leases and hire purchase contracts	(16)	(78)	(78)
Net cash flow from financing activities	(307)	(480)	423
Increase / (decrease) in cash and cash equivalents	131	(302)	(353)
Cash and cash equivalents at the beginning of the year	140	493	493
Cash and cash equivalents at the year end	271	191	140

Notes to the interim report: 

unaudited results for the six months to 31 March 2008

1. Basis of preparation

The financial information in these interim statements is prepared under the historical cost convention and in accordance with international accounting standards. It does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the full preceding year has been based on the statutory accounts for the year to 30 September 2007 as restated for the implementation of IFRS accounting standards. The details of the restatement of the results for the year ended 30 September 2007 and the six months ended 31 March 2007 are contained in the Group's formal transition document which has been delivered to the Registrar of Companies. A copy of the transition document is also on the company's website (www.zytronic.co.uk).

The taxation charge is calculated by applying the Directors' best estimate of the annual tax rate to the profit for the period. Other expenses are accrued in accordance with the same principles used in the preparation of the annual accounts.

The interim results for the period to 31 March 2008 are not reviewed by Ernst & Young LLP and accordingly no opinion has been given.

2. Basis of consolidation

The Group results consolidate the accounts of Zytronic plc and all its subsidiary undertakings drawn up to 31 March 2008.

3. Tax charge on profit on ordinary activities

The estimated tax rate for the year of 27% has been applied to the half year's profit before tax, in accordance with the ASB's statement on interim reports. 

4. Earnings per share

Basic earnings per share ("EPS") is calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the period. All activities are continuing operations and therefore there is no difference between EPS arising from total operations and EPS arising from continuing operations.

				Weighted			Weighted
				average			average	Restated
				number	Earnings	Restated	number	Earnings
	Earnings			of shares	per share	Earnings	of shares	per share
	31 March			31 March	31 March	31 March	31 March	31 March
	2008			2008	2008	2007	2007	2007
	£'000			thousands	pence	£'000	thousands	pence
Profit on ordinary activities
after taxation attributable
to ordinary equity holders		484		14,662	3.3	381	14,640	2.6
Basic EPS	484			14,662	3.3	381	14,640	2.6

Notes to the interim report: 

unaudited results for the six months to 31 March 2008 (continued)

4. Earnings per share (continued)

The weighted average number of shares for diluted EPS is calculated by including the weighted average number of shares under option:

				Weighted			Weighted
				average			average	Restated
				number	Earnings	Restated	number	Earnings
	Earnings			of shares	per share	Earnings	of shares	per share
	31 March			31 March	31 March	31 March	31 March	31 March
	2008			2008	2008	2007	2007	2007
	£'000			thousands	pence	£'000	thousands	pence
Profit on ordinary activities after taxation attributable to ordinary equity holders			484	14,662	3.3	381	14,640	2.6
Weighted average number of shares under option		-		124	-	-	196	-
Diluted EPS	484			14,786	3.3	381	14,836	2.6

		Weighted
		average	Restated
	Restated	number	Earnings
	Earnings	of shares	per share
	30 September	30 September	30 September
	2007	2007	2007
	£'000	thousands	pence
Profit on ordinary activities after taxation  attributable to ordinary equity holders	534	14,640	3.6
Basic EPS	534	14,640	3.6

The weighted average number of shares for diluted EPS is calculated by including the weighted average number of shares under option:

		Weighted
		average	Restated
	Restated	number	Earnings
	Earnings	of shares	per share
	30 September	30 September	30 September
	2007	2007	2007
	£'000	thousands	pence
Profit on ordinary activities after taxation
attributable to ordinary equity holders	534	14,640	3.6
Weighted average number of shares under option	-	147	-
Diluted EPS	534	14,787	3.6

Notes to the interim report: 

unaudited results for the six months to 31 March 2008 (continued)

5. Dividends

The Directors propose the payment of an interim dividend of 1.0p per share (2007: 1.0p), payable on 27 June 2008 to shareholders on the Register on 13 June 2008. This dividend has not been accrued in these Interim Accounts. The dividend payment will be £146,000.

The dividends in the current and prior year are as follows:

	Six months to	Six months to
	31 March	31 March	Year to
	2008	2007	30 September
	Unaudited	Unaudited	2007
	£'000	£'000	£'000
Ordinary dividends on equity shares
Final dividend of 2.0p per ordinary share paid on 16 March 2007	-	293	293
Interim dividend of 1.0p per ordinary share paid on 29 June 2007	-	-	146
Final dividend of 2.0p per ordinary share paid on 7 March 2008	293	-	-
	293	293	439

6. Notes to the statement of Group cashflows

		Six months to	Six months to
		31 March	31 March	Year to
		2008	2007	30 September
		Unaudited	Unaudited	2007
		£'000	£'000	£'000
Cash at bank and in hand		563	403	317
		563	403	317

Cash at bank earns interest at floating rates based on daily bank deposit rates.

The fair value of cash and cash equivalents is £271,000 (2007: £191,000).

At 31 March 2008, the Group had available £3.2m (2007: £1.3m) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met. £1.2m (2007: £1.3m) of these facilities fall for review within one year and the remainder is available until 30 June 2010.

For the purpose of the consolidated cashflow statement, cash and cash equivalents comprise the following: 

		Six months to	Six months to
		31 March	31 March	Year to
		2008	2007	30 September
		Unaudited	Unaudited	2007
		£'000	£'000	£'000
Cash at bank and in hand		563	403	317
Bank overdraft		(292)	(212)	(177)
		271	191	140

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